UK house price growth weakened further in July, while private rents continued to accelerate, according to the latest figures from the Office for National Statistics (ONS).
The figures point to a housing market facing continued pressure from higher mortgage costs, household expenses and wider economic uncertainty as the autumn approaches.
Average UK house prices rose by 1.4% in the year to July, reaching around £273,000. This was down slightly from the 1.5% annual growth recorded in June, marking the third consecutive month in which annual house price growth has slowed.
Regional Differences Remain Significant
The overall UK figure masks considerable differences between regions.
In England, the average property price reached £293,000, representing annual growth of 1.1%. Wales recorded stronger growth of 2.6%, taking the average price to £215,000, while Scotland saw prices rise by 2.3% to £196,000.
Northern Ireland recorded considerably stronger growth. Average prices reached £202,000 in the second quarter, an annual increase of 9.2%.
The ONS noted that the comparatively weak growth recorded in Northern Ireland during the same period a year earlier coincided with changes to stamp duty introduced in April 2025.
Within England, the North East recorded the strongest annual house price growth at 4.9%.
London remained the weakest-performing region. Prices fell by 3.3% annually, meaning the capital has now recorded annual price falls for 11 consecutive months.
Rental Growth Moves in the Opposite Direction
While house price growth is losing momentum, the rental market is moving in the other direction.
The average private rent in the UK reached £1,400 per month in August, according to the ONS. This was £52 higher than a year earlier, representing annual growth of 3.8%.
Rental inflation accelerated from 3.7% in July.
Aimee North, head of housing market indices at the ONS, said the slowdown in house price inflation was being driven particularly by weaker conditions in London and the South West.
At the same time, stronger rental growth in London helped push overall UK rental inflation to its highest level since December.
Mortgage Costs Continue to Weigh on Buyers
The latest housing figures come against a backdrop of renewed inflationary pressure.
Consumer Prices Index inflation increased to 3.1% in August, up from 2.9% in July, with higher fuel and energy costs contributing to the increase.
David Hollingworth, associate director at L&C Mortgages, said financial markets have become increasingly sensitive to signs that inflation could remain higher for longer.
Higher borrowing costs are already affecting homeowners and prospective buyers, with lenders increasing fixed mortgage rates as funding costs rise.
Hollingworth warned that further market volatility could place additional pressure on mortgage pricing in the short term.
For anyone looking to buy or remortgage, this could make borrowing more expensive and add another layer of uncertainty to decisions about moving home.
Buyers Have More Time to Prepare
The slower housing market could nevertheless give some buyers additional time to strengthen their finances before making a purchase.
Sarah Coles, head of personal finance at AJ Bell, said a quieter market can give prospective buyers an opportunity to build up savings for both the cost of moving and unexpected expenses associated with owning a new property.
For first-time buyers, this could also mean having more time to build a deposit.
Pricing Remains Important for Sellers
The slower market also means sellers need to be realistic about asking prices.
Nick Leeming, chairman of Jackson-Stops, said properties that are presented well and priced realistically are continuing to attract attention.
Homes that enter the market at prices significantly above what buyers expect risk losing momentum during the early stages of marketing.
This could become increasingly important if higher mortgage rates continue to restrict affordability.
Rental Supply Remains Tight
Conditions are particularly challenging for tenants.
Amy Reynolds, head of sales at London estate agency Antony Roberts, said landlords continuing to leave the rental market are contributing to limited supply.
As a result, tenants are facing strong competition for desirable properties, with little indication that conditions will improve significantly during the autumn.
She said the sector would be hoping for a boost following the Budget and a stronger December market going into 2027.
Nathan Emerson, chief executive of Propertymark, also highlighted the importance of attracting continued investment into the rental sector so that supply can keep pace with demand.
What Does This Mean for the Property Market?
The latest figures show two contrasting trends.
House price growth is slowing as buyers contend with higher mortgage costs and wider economic pressures, while rents are rising more quickly as demand continues to outpace available supply.
Regional differences are also becoming increasingly important. London remains under pressure in the sales market, while parts of the North continue to record stronger price growth.
For landlords, the continued strength of rental demand provides support for rents, but limited supply and rising costs remain significant issues. For buyers, higher mortgage rates mean affordability will continue to play an important role in the housing market as the year progresses.
With inflation still elevated and borrowing costs under pressure, the autumn could prove important for both the sales and rental markets.
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